The Housing Crisis: Main Street Needs Help, Too

By Steven Hill with John Bartlett, October 23, 2008, The Guardian and Capitol Weekly

Seven hundred billion dollars to bail out the banking and financial industries is a lot of money. But let’s not forget where this crisis started: in a failing housing market, the initial domino in the meltdown. The banks are being bailed out – but what about housing?

Too many people today are spending too much of their income on keeping a roof over their heads. Nearly half of Americans are “rent burdened,” spending more than 30% of their income on housing. Whether it is high rents or a mortgage, these excessive costs drive people into debt. The problem has been escalating, and examples can be seen in all sectors of the housing market and all areas of the country.

For instance in April of this year, the Chicago Housing Authority opened its waiting list for Section 8 housing vouchers. More than 250,000 people signed up to be in a lottery for the 40,000 open slots. “Winning” a voucher meant its holder will “only” have to pay 30% of their income to rent. By winning this lottery they will have enough leftover money — barely enough — to afford food, medicines and other necessities, providing these families with some semblance of security.

Those are the lucky ones. Nearly 20% of families pay 50% of their income to housing costs. Those families have to make painful choices between housing, food and medicines that no one in this land of wealth should have to make. They are one paycheck or medical bill away from losing their home. Tens of thousands of these people could benefit from an expanded rental subsidy program, yet the federal budget for Section 8 housing vouchers is flat.

For homeowners the situation is no better. Adjustable rate mortgages have left many owners either barely or unable to pay escalating mortgages. So far in the first six months of 2008, foreclosures have risen to an all time high. In July of this year, 272,171 properties received a foreclosure filing or a default notice, were warned of a pending auction or were foreclosed on during the month.

Yet during the recent banking bailout, proposals that would have helped homeowners meet their mortgage payments and stay in the homes failed to gather sufficient bipartisan support. As more homeowners go into foreclosure and their homes are boarded up, that unleashes a domino effect where the blighted homes drag down the property values in these neighborhoods, worsening the situation for everyone and further sinking the economy.

But it’s not just during the recent banking bailout that the nation’s housing needs have been ignored. Looking at federal investment in public housing going back decades, we see that much of public housing is deteriorating and in need of repair. The lack of repairs puts the building’s residents at risk, as well as threatens the viability of the building. Yet once again the federal budget for maintenance of public housing is shrinking. It’s nothing less than tragic that, as the need for housing is increasing, the real dollar investment has been decreasing.

The national housing crisis calls for a different approach. As Congress and the President seek to ease the crisis, solutions must be found in programs that ensure the affordability and availability of safe and decent housing.

First, we must start with ensuring housing stability, and that will require investment in the existing housing stock. Second, legislation should focus on making sure that the thousands of people facing foreclosure or eviction are able to stay in their homes. Interest rates should be capped to make sure that each family’s investment is protected, and this in turn will also help to make sure that the banks don’t fail. Barack Obama has proposed a three month moratorium on foreclosures for some homeowners, and that’s a good start.

Third, rental subsidies can be increased or rent control can be used to ensure that no one pays more than 30% of their income to rent. Finally, the government can build more affordable housing and make sure that it is well-maintained; part of this task can be accomplished with a sizable increase in the use of nonprofit housing corporations who build “social housing” for people, not for profits.

One of the primary roles of government should be to create conditions so that families can succeed. Rather than saying Wall Street and the banking industry are too big to fail, a better outlook would recognize that Main Street and all the people living in our communities are too many to fail.

It will not matter how much relief the government gives to Wall Street. If housing costs remain too high, Main Street will continue to struggle as more and more people are unable to pay their mortgages or rents.

A provocative, remedy-based perspective on the joint complexities of economic stability and ever expanding technology.–Kirkus Reviews

“Hill hits Silicon Valley darlings like Uber and Airbnb alongside the former online black market Silk Road, right-to-work laws, and factory robots all under the umbrella of “naked capitalism.” He explains how the rise of the “1099 workforce” is not limited to Silicon Valley; more and more traditional jobs in fields like manufacturing are turning to contractors to perform the same tasks full-time employees used to do. In addition to costing workers in benefits and safety nets, misclassifying workers as contractors costs federal and state governments billions of dollars annually in lost tax revenue.” ―Washington Monthly

“For anyone driven crazy by the faux warm and fuzzy PR of the so-called sharing economy Steven Hill’s Raw Deal: How the “Uber Economy” and Runaway Capitalism Are Screwing American Workers should be required reading… Hill is an extremely well-informed skeptic who presents a satisfyingly blistering critique of high tech’s disingenuous equating of sharing with profiteering…Hill includes two chapters listing potential solutions for the crises facing U.S. workers…Hill stresses the need for movement organizing to create a safety net strong enough to save the millions of workers currently being shafted in venture capital’s brave new world.” ―Counterpunch

“A growing underclass scrambling to make ends meet at the whim of increasingly picky and erratic employers, that number could balloon to 65 million within 10 years, or about half of the domestic workforce, warns Steven Hill in his troubling new book, Raw Deal. This brand of worker abuse cuts across industries and company size. Hill calls out Uber, AirBnb, Merck, Nissan, and dozens of others. Hill does a nice job of putting it in starker, easier-to-understand ways.” ―Washington Independent Review of Books

“Steven Hill’s book Raw Deal is a red-faced, steam-out-the-ears indictment of sharing apps. Yet Hill offers a pragmatic, almost post-ideological solution: “individual security accounts” for workers. Companies that use independent contractors, or offer scant benefits for employees, would have to add on a certain percentage of their pay as a contribution to those accounts, which would cover health care, unemployment insurance, and more. There’d be a mechanism ― and a requirement ― for companies to contribute to the long-term well-being even of workers who aren’t on their traditional payrolls.” ―Boston Globe

“Raw Deal is a book for its time. Steven Hill perfectly captures the anxiety of the American worker in today’s increasingly digital economy. Hill presents some compelling ideas, the most important being something he calls the Economic Singularity. In this unfortunate tipping point, the concentration of wealth in the hands of the few results in economic implosion because the 99 percent can’t afford to buy anything the 1 percent has to sell. The United States is turning into a nation of 1099 workers who eke out a living driving cars, renting rooms and running errands for people who apparently have better things to do with their time. Throw in self-thinking computers and obedient robots, and there won’t be any work left for plain old Homo sapiens…Hill proposes that we offer 1099 workers a new safety net consisting of tax deductions, individual security accounts and multiemployer health care plans. All good ideas.” ― San Francisco Chronicle

This book is a must read for those concerned about how technology is disrupting the way we work and eroding the social safety net, and how policy makers should respond to ensure that the growing number of workers in the “gig” economy earn adequate benefits.—Laura D’Andrea Tyson, UC-Berkeley and former Chair of the US President’s Council of Economic Advisers

“Steven Hill’s groundbreaking book on the part-time, unstable ‘Uber Economy’ shows how a new sub-economy becomes a work of law-flouting regress undermining full-time work. Remote corporate algorithms run riot!”— Ralph Nader, consumer advocate

For many years, Steven Hill’s analysis, commentary and activism have helped shape our understanding of the U.S. political economy. His latest book, Raw Deal is A riveting expose that shows with alarming lucidity what Americans stand to lose if we don’t figure out how to rein in the technological giants that are threatening the American Dream.–Katrina vanden Heuvel, editor and publisher of The Nation

In Raw Deal, Steven Hill documents in frightening detail the ways in which new forms of work promise to plunge US workers and their families into further economic hardship, risk-assumption, and instability. Fortunately, Hill does not simply anticipate catastrophe; he closes the book with an informed call for institutional reforms that would lessen the negative consequences of these potentially dangerous forms of work. Anyone concerned with US working conditions – whether American workers, worker advocates, labor market scholars, or policy-makers – must read this book .— Janet C. Gornick, Professor of Political Science and Sociology, Graduate Center, City University of New York, Director, LIS: Cross-National Data Center in Luxembourg

Praise for Expand Social Security Now

“Read this book before you vote. Few issues are more important to your personal economic future. Steven Hill shows what’s at stake, and he offers solutions that Americans of all stripes can agree on.”—Robert B. Reich, author of “Saving Capitalism: For the Many, Not the Few”

“Steven Hill has written a barn burner of a book. Or perhaps I should say ‘myth buster,’ because he systematically demolishes the false justifications for slashing Social Security. In place of misplaced animus and misleading arguments, he offers a strong case for dramatically expanding America’s most successful domestic program in an age of rising inequality and widespread financial insecurity.”—Jacob S. Hacker, coauthor of “American Amnesia: How the War on Government Led Us to Forget What Made America Prosper”, Professor, Yale University

“Steven Hill has written a vigorous defense of Social Security, the country’s most important social program. While most political debate in recent years has focused on ways to cut Social Security or privatize it, Hill goes in the opposite direction and argues for a robust expansion. Hill proposes a Social Security program that would be adequate by itself to support a middle-class retirement.”—Dean Baker, co-founder of the Center for Economic and Policy Research, and author of “Getting Back to Full Employment: A Better Bargain for Working People”

“Steven Hill has produced a dynamite handbook for angry Americans who seek to take back democracy. The true contest is not Republicans versus Democrats. It is the American people versus Washington. And this is the sleeper issue the people can win. The governing elites in both parties are trying to eviscerate Social Security—arguably the most successful and most popular program created by the federal government. Hill explains why the political insiders and their Wall Street patrons are wrong about Social Security. He shows us how to mobilize to defeat the power elites and expand Social Security rather than destroy it.”—William Greider, author of “Come Home, America: The Rise and Fall (and Redeeming Promise) of Our Country”

Praise for Europe’s Promise

Financial Times: “Steven Hill is a lucid and engaging writer. He makes you sit up and think.”

The Economist: “In a new book, Steven Hill extols the European social contract for better government services. Life in Europe is more secure, he argues, and therefore more agreeable.”

Hendrik Hertzberg, The New Yorker: “Like a reverse Alexis de Tocqueville, Steven Hill dauntlessly explores a society largely unknown to his compatriots back home.”

Andrew Moravcsik, Foreign Affairs: “Europe’s Promise is a timely and provocative book . . . the “social capitalist” policies of European countries represent best practices in handling most of the challenges modern democracies face today.”